Second Circuit awards preliminary injunction to protect VIRGIN territory

In Virgin Enterprises Ltd v Nawab, the US Court of Appeals for the Second Circuit has reversed a district court decision that rejected the plaintiff's request for a preliminary injunction restraining the defendant's use of the term 'virgin wireless' as a mark for mobile phone retail stores. The Second Circuit held that although the plaintiff did not have a US registration for VIRGIN that specifically covered mobile phones and related services, it had provided sufficient evidence that it intends to use the mark in connection with such goods and services.

Virgin Enterprises, a UK company that offers a wide range of goods and services, owns a US registration for VIRGIN covering various electronic goods, but not telephones, mobile phones or telecommunication services. It filed an action in the US District Court for the Eastern District of New York requesting a preliminary injunction restraining Nawab and a number of other related parties from using the term 'virgin wireless' as a mark to promote mobile phone shops.

The district court refused Virgin's request. It noted that VIRGIN is a strong mark and that the term 'virgin wireless' was very similar thereto. However, it found that preliminary injunctive relief was not warranted because Virgin's sales of other electronic goods, such as CD players, MP3 (Moving Picture Experts Group Layer-3 Audio) players and cameras were not sufficiently similar to Nawab's sales of mobile phones to cause confusion.

On appeal, the Second Circuit faulted the trial court for "misunderstanding" the likelihood of confusion test, particularly by not giving sufficient weight to the proximity of Virgin's sales of other types of electronic apparatus to Nawab's sales of mobile phones. Moreover, the Second Circuit suggested that the district court should have given weight to Virgin's demonstrable efforts to move into the mobile phone business. This factor, which the court labelled 'bridging the gap', weighs in favour of a trademark owner when the evidence shows that there is a likelihood that it will use its mark in connection with goods or services offered by the particular defendant involved. Here, the Second Circuit reasoned that Virgin had provided sufficient evidence of concrete plans to move into the mobile phone business, including filing US applications to register the VIRGIN mark for goods and services in that field, and marketing in the United Kingdom relating to a mobile phone service that would operate in the United States.

In an interesting side note, the Second Circuit reasoned that bad-faith considerations (one of the issues to be considered in evaluating likelihood of confusion) relate to the type of relief to be granted, rather than to the decision as to whether there is a likelihood of confusion. This is somewhat of a departure from prior case law, which tends to presume a likelihood of confusion where the defendant deliberately traded on the goodwill associated with the plaintiff's mark.

Karin Segall, Darby & Darby, New York

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